Uber and Lyft granted emergency stay, will not shut down tonight


An appeals court has allowed ride-hailing giants Uber and Lyft to continue treating their drivers as independent contractors while an appeal works its way through the court.

Lyft said it has advocated for a path to offer benefits including a minimum earnings guarantee and a healthcare subsidy for drivers under the status as independent contractors.

Lyft Inc shares were up 5.7% after the ruling, and Uber Technologies Inc shares were up 6.7%. This means that the state's unemployment fund, that the companies have never contributed to, are paying for their own workers' unemployment benefits. The law, in effect since January, mandates that the companies treat their workers in California as employees-a requirement that would upend the companies' business models. Then a last-minute reprieve averted what was threatening to become a midnight shutdown of the ride-sharing services in California.

Uber has said it is exploring a franchising model that was shift the employment burden from headquarters to independent operations that seek to run ride-hailing services under its banner, similar to black auto and livery fleets, or the cab industry. Prop 22, "App-Based Drivers as Contractors and Labor Policies Initiative", was sponsored by companies that employ gig workers to let citizens decide if independent contractors should be able to operate in California.

Lyft announced that as a result of a court order, they be suspending rideshare throughout California at 11:59 PM PT on Thursday, August 20. At the time, Uber was said to be close behind.

California Attorney General Xavier Becerra said: "California is America's economic engine because innovation and worker rights go hand in hand".

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The stay paused a judge ruling requiring the ride-share companies to reclassify their drivers as employees with benefits by Friday. "Any company that suggests otherwise is peddling a false choice".

Thursday's order lays out new deadlines for the companies. "In either case, drivers would likely earn a predetermined hourly wage for their time on-app-but, in exchange, fleets would need to monitor and enforce drivers' activity and efficiency, for instance by putting drivers into shifts, dictating where and when they must drive, and enforcing trip acceptance criteria".

Under the "third way" proposal outlined in the ballot measure, drivers would receive a health care stipend, a minimum wage, expense reimbursements as well as medical and disability coverage for injuries on the job.

AB5 establishes a three-prong test requiring employers to prove contract workers are independent, meaning the laborers must be free from an organization's control or performing work outside the company's core business, which Uber and Lyft failed. "That's the solution on the ballot in November, and it's the solution drivers want because it preserves their ability to earn and to use the platform as they do now - whenever they want - while also getting historic new benefits".

Analysts cautioned California regulators against the risk of putting more people out of work as American unemployment has spiked amid the coronavirus pandemic. Lyft, which only operates in the USA and does not have a food delivery business, last week said California makes up some 16% of total rides.